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Case Study of John the Payday Loan Borrower
Disclaimer The below is a grossly simplified case study of a typical (generalized and averaged) UK payday loan borrower. This case study is based on my observations and it may not ring true elsewhere in the world or even within the UK - it is for illustration purposes only. The world is still heterogeneous in terms of culture and the extent of globalization itself. (Fergusson, 1992). The Narrative John’s Local vs Global dilemma * John is a UK citizen born, living and working in London. His earnings belong to the low income band. * He currently finds himself in a financial emergency, and needs money fast to cover his expenses that occur due to his tendency to consume more than he can afford. * John faces several options including borrowing from a bank, using his debit card overdraft, etc. * However, John needs money fast, which rules out most traditional loans. Moreover, due to his poor credit history, John does not have a credit card and is not eligible to most formal financing options. * John faces two options: borrowing from his friend Dave the Loan Shark, or borrowing a payday loan he saw advertised on the TV. Inadequacies of the local * John is in favour of supporting small British businesses, so he likes the idea of borrowing locally from Dave. * John wants to improve his credit rating so he can borrow more cheaply next time. Because Dave lends from his own pocket, John’s loan would not be on a UK wide credit record. * Dave’s lending “business” is not technology-based, it offers an agreement between two parties – much like in the ancient ages. Thus, it cannot satisfy John’s need to be in the modern credit network. Net over Self? * John experiences a dilemma because his identity and values are partially defined by the locale he was brought up and lives in – that is the United Kingdom. He wants to borrow from Dave, but a payday loan company is better for his financial future. John experiences what Castells refers to as the ‘Net vs. Self’ phenomenon. * John chooses a payday loan as he believes it will improve his credit rating and hence chances of success in the society he lives in. Exclusion from the finance network results in tangible disadvantages for John as his borrowing is more expensive. Therefore, John complies with the network logic choosing 'net' over 'self'. John swims in the global capital pools * He applies on a payday lender’s website, thus leaving an electronic trace. John’s application is processed by a computer algorithm that connects his record to the UK’s borrower database. He enters the waters of the global financial markets.When John applies for a payday loan, he enters the waters of the global financial markets. * Once his application is approved, the cash is wired to John’s bank account for his disposal. * The payday loan funds then “leave” John and enter the UK economy.